More banks are buying mortgage servicing rights now, reversing a post-crisis shift that saw nonbanks dominant the MSR purchasing landscape, according to a Fitch Ratings report released Tuesday.
Fitch cites bank agreements to purchase several bulk packages of servicing rights from nonbank servicing giant Ocwen Financial Corp., which has been under pressure to downsize due to legal and regulatory scrutiny.
While the Fitch report does not call out any bank MSR buyers by name, JPMorgan Chase & Co. is rumored to be acquiring $45 billion of Ocwen MSRs.
"While there have been a number of trades, both banks and nonbanks have been involved as buyers," Roelof Slump, a Fitch managing director, said in an interview. He indicated the buyers include large depositories.
Banks still generally want nothing to do with the underperforming loans they sold to nonbank entities like Ocwen in the wake the financial crisis, but Fitch confirmed they are opportunistically buying servicing rights primarily on newer, performing product backed by government-sponsored enterprises Fannie Mae and Freddie Mac.
Depositories are better positioned for the increased regulation of servicing because they historically have operated under more controls, with many large players making notable changes under the 2012 National Mortgage Settlement, according to Fitch. Broader regulation implemented the Consumer Financial Protection Bureau implemented last year is largely in line with settlement requirements, allowing banks to make an easier transaction, Fitch said.
"We think that the nonbanks are working reasonably well through the process, but I would say the banks are demonstrating more comfort in the new landscape," said Slump.
While bank involvement in servicing is growing, according to Fitch, it acknowledges that growth may be constrained by factors such as new Basel III capital requirements.